India To Maintain 6-6.5% Real GDP Growth In FY26 On Resilient Domestic Demand: UBS | Economy News

Last Updated:July 26, 2025, 15:15 IST

UBS notes that India is less vulnerable to global trade shocks than many other Asian economies due to its limited goods trade dependence and a strong services export sector.

India’s economy grew 7.4% in the January-March quarter (Q4) of FY25, beating expectations and marking the strongest quarterly growth of the fiscal year.

India is expected to sustain a robust 6-6.5% real GDP growth in FY26, driven by resilient domestic consumption and potentially lower global crude oil prices, according to the latest report by UBS. This projection comes despite headwinds from recent tariff increases.

UBS noted that India is less vulnerable to global trade shocks than many other Asian economies due to its limited goods trade dependence and a strong services export sector, which now makes up about 47% of total exports.

The report also highlighted a continued policy emphasis on improving monetary transmission. With a total 100 basis points repo rate cut already implemented in calendar year 2025, UBS analysts suggest there may be room for another 25-50 bps of rate easing if inflation stays benign and external risks begin to weigh on growth momentum.

Additionally, the report forecasts a reduction in fiscal drag, with the central government likely to accelerate capital expenditure targets. It also pointed to the possible reduction in retail diesel and petrol prices ahead of Diwali and the Bihar state elections in October-November, which could boost household disposable income and further support consumption.

India’s economy grew by 7.4 per cent in the January-March quarter (Q4) of FY25, beating expectations and marking the strongest quarterly growth of the fiscal year. This was a sharp rise from the 6.2 per cent recorded in the previous quarter.

Experts attribute this robust performance to strong domestic consumption, increased public investment, and low reliance on exports.

Chief Economic Advisor V Anantha Nageswaran expressed optimism about the country’s economic trajectory, stating: “India’s economy is in good shape despite the challenging global environment.”

The International Monetary Fund (IMF), in its April 2025 World Economic Outlook, echoed similar confidence, projecting India to remain the fastest-growing major economy for the next two years. The IMF estimates 6.2% growth in 2025 and 6.3% in 2026, underscoring India’s strong momentum and leadership in global growth.

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